Two factors led to second-generation television around 1980, when metropolitan markets got wired for cable. First was HBO, which was originally a provider of recently released motion pictures. Previously, such movies were not permitted on TV for years. The second factor was the advent of satellite distribution, pioneered by HBO and Turner Broadcasting. Unlike HBO, Turner's objective was merely to increase the audience for its Atlanta broadcast station, thereby obtaining higher advertising rates. Given the paucity of alternate programming available at the time, Turner's lineup of old movies and Braves baseball games enjoyed widespread appeal. CATV operators across the county promptly added it as an imported signal. Later the technology fostered the formation of the entire cable network industry.
Today television is transitioning from the second to a third generation -- and it's all about Internet-Video- to-the-TV.
One reason is that an abundance of connection sockets in flat panel televisions enables a multitude of Internet-connected devices to mate with the TV. The surprise leader is the laptop computer. Its on-board WiFi links over a home network and thence to the Internet, thereby enabling it to function as an Internet gateway for the TV. A remote mouse and keyboard provides viewers a lean-back experience 15 feet to 20 feet from the screen. While the uninitiated often assume the set-up is complex, instructional videos demonstrate that it's easier than attaching a cable set-top box.
Over one-third of domestic homes have flat panel TVs now, and the percentage is forecast to rise to nearly 90% by 2011.
According to the Pew Internet & Family Life Project, 35% of Internet users had viewed a television show or movie online by last April. Nearly one-fourth of them had watched the Internet video on their TVs via a computer as Internet gateway.
The Pew numbers imply that nearly 10 million Americans have connected computers to their TVs. However, the laptop as Internet gateway will not be the ultimate standard. Instead it is a factor leading to one of two scenarios.
First might be a family of browser-centric televisions that will enable consumers to surf the Net without restrictions. Such freedom is significant because it provides access to the long tail, as well as popular programming at sites like Hulu and TV.com.
A second potential mass market scenario borrows from the popular interface of the iPhone and iPod Touch that made over 40 million consumers familiar with accessing Internet applications by touching icons. Yahoo transported the concept to televisions with its connected TV widgets. Leading set makers, such as LG and Samsung, offer the platform in selected new models. However if the concept is successful, there is no reason to expect Yahoo to hold a monopoly. For example, it's analogous to the iPhone Apps Store and could easily be applied to the Apple TV or some future Apple product.
However, there are two problems with the widget approach.
First, some Web sites may not want to provide them. A case in point is Hulu.com, which offers popular TV shows and movies. Earlier this year Hulu disabled similar technology from Boxee. Essentially, it did not want viewers watching Hulu streams on a TV screen. A browser-centric TV would prevent Hulu from such blocking action and would therefore be more appealing to the consumer.
Second, a widget platform is not readily compatible with the search function. But a widget that merely transports viewers to the YouTube home page is almost valueless. YouTube visitors must normally search for the desired content among the gigantic number posted. A browser-centric TV equipped with a remote mouse and keyboard solves this problem as well.
In sum, the era of third-generation television is at hand. The TV is evolving into a dual-function device. In one context it remains a conventional TV, but in a second it is a giant window into the Internet. Choice of function is a one-button selection on a standard TV remote. Ultimately consumers will demand unlimited Internet access on the television.